TaxTMI 
TaxTMI 
2017 (4) TMI 1223
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....ctice.- (1) Notwithstanding anything contained in this Act, if the Central Government is satisfied- (a) that a practice was, or is, generally prevalent regarding levy of duty of excise (including non- levy thereof) on any excisable goods; and (b) that such goods were, or are, liable- (i) to duty of excise, in cases where according to the said practice the duty was not, or is not being, levied, or (ii) to a higher amount of duty of excise than what was, or is being, levied, according to the said practice, then, the Central Government may, by notification in the Official Gazette, direct that the whole of the duty of excise payable on such goods, or, as the case may be, the duty of excise in excess of that payable on such goods, but for the said practice, shall not be required to be paid in respect of the goods on which the duty of excise was not, or is not being, levied, or was, or is being, short- levied, in accordance with the said practice.] (2) Where any notification under sub- section (1) in respect of any goods has been issued, the whole of the duty of excise paid on such goods or, as the case may be, the duty of excise paid in excess of that payable on such goods, wh....
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....ne from Oleo Pine Resin. One method is the vacuum chemical treatment process which uses power in almost all the processes. The second method, commonly known as the Bhatti process, is entirely manual except for the use of power to operate the pump for lifting up the water to the storage tank for the purpose of condensing. Thus, in the second method, power is used, but is confined to operating the pump for lifting up the water to the storage tank for the purpose of condensing. The appellant is using this second method of manufacturing Rosin/Turpentine. 6) Insofar as the first method of manufacturing Rosin/Turpentine is concerned, wherein power is used in all the processes, there is no dispute that it is treated as a manufacturing process with the aid of power and the units were manufacturing these products using this methodology or covered by the provisions of the Act. There are about ten units which are adopting this method and are paying the excise duty under the Act on the goods so manufactured. 7) Majority of the units, i.e. about 300 in number, are using the Bhatti method whereby use of power is confined to lifting of water to overhead tanks for condensation of Turpentine vapo....
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....ember, 2004 to September, 2005 for the amount of Rs. 50,760/-, Rs. 66,44,602/-, Rs. 1,01,92,867/- and Rs. 81,44,105/- respectively. One more unit M/s. Gurukripa Resins Pvt. Ltd., Nagpur (for short 'Gurukripa') was also issued similar show cause notices. Case of the appellant is that out of 300 units using Bhatti method, only these two units were picked up for raising demand of excise. 10) Gurukripa had challenged the order of assessment passed in its case by filing the appeal before the Central Excise and Service Tax Appellate Tribunal, Mumbai (for short 'CESTAT'). The said appeal of Gurukripa was allowed vide judgment dated 14.01.2004. The Department challenged the order passed by the CESTAT in the case of Gurukripa, in which the Revenue succeeded as that appeal was allowed by this Court vide its judgment dated 11.07.2011, as pointed out above. 11) This Court held that the process of lifting of water into the cooling tank was integrally connected with the manufacture of these goods and hence, if the power was used for lifting of water, the exemption would not be available. This Court also held that the TRU's circular of 1978 was not applicable since the same stood withdrawn in 1....
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.... prayers: "(a) Issue a writ of certiorari or any other similar writ or direction for quashing the decision, communicated vide letter dated 30.09.2014 of the respondent that the notification under Section 11C of the Central Excise Act, 1944 cannot be issued for extending the benefits of not requiring to pay the Central Excise Duty to the units manufacturing Rosin and Turpentine without the aid of power, except for the purpose of using electricity to pump, for lifting up water for condensation to overhead tank, for the period from 27.05.1994 to 28.02.2006, even though the practice of non-levy on these units for the said period has already been established in a survey done by the Department; (b) Issue a writ of mandamus or any other similar writ or direction to the respondent to issue the notification under Section 11C of the Central Excise Act, 1944 for extending the benefits of not recovering the Central Excise Duty from the units manufacturing Rosin and Turpentine without the aid of power, except for the purpose of using electricity to pump for lifting up water to overhead tank, for the period from 27.05.1994 to 28.02.2006; and (c) Pass any other order or direction as the Court ....
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....conducting a fresh survey. It was found that though there was a practice of non-levy of duty, issuance of Section 11 [C] notifications will only benefit two companies, namely, M/s. Gurukripa Resins Pvt. Ltd., Nagpur and M/s. Dujodwala Industries, Mumbai. Decision was taken with the approval of the then revenue secretary [p/112 N.S.] That section 11 [C] notification cannot be issued to favour only a few select industries and it was decided to reject the request." 16) It was, thus, argued that there was a specific finding of the Department itself that there was a prevalent practice of non-levy of duties on units which manufactured the same products and use power only to pump water to the cooling tank. It was, thus, argued that conditions mentioned under Section 11C of the Act for issuing the notification were clearly fulfilled. 17) Proceeding on the aforesaid basis, submission of the learned counsel for the appellant was that once conditions of a particular statutory provision were fulfilled, the Government was obligated to exercise the power with the issuance of a required notification. It was argued that this power rested in the Central Government under Section 11C of the Act cou....
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....each case. Lord Blackburn observed in the said decision that enabling words were always compulsory where the words were to effectuate a legal right." 18) Learned counsel also drew our attention to the judgment in the case of Dhampur Sugar Mills Ltd. v. State of U.P. & Ors. (2007) 8 SCC 338 wherein the Privy Council decision in Julius was again referred to about enforcement of the obligation to which the power is coupled with duty, by issuing order for that purpose. It was submitted that in the said case, the Court had directed the Government to constitute an Advisory Council while rejecting the contention of the Government that it was for the Government to exercise its discretion. It was also submitted that the same approach and legal position has been laid down in D.K. Basu v. State of West Bengal & Ors. (2015) 8 SCC 744 where it was held that the power of the State Governments to set up the State Human Rights Commissions was not a power simpliciter but a power coupled with the duty to exercise such power, especially so because it touched the right of affected citizens to access justice, which was a fundamental right covered by Article 21. The said duty of the State Government wa....
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....his effect was untenable. The rejection order of the Minister came only in September, 2014 and the writ petition was filed shortly thereafter. The only reason why the appellant was compelled to pay excise duty was that it could not obtain an interim stay in the writ petition filed by it. It is, thus, submitted that in the event of the appellant succeeding in the present case, there should be an order for refund of the amount paid by the appellant, along with interest thereon at a rate which this Court considers reasonable. 21) Countering the aforesaid submissions with equal vehemence and also adopting the reasoning given by the High Court in the impugned judgment in support of its conclusion, Mr. A.K. Sanghi, learned senior counsel appearing for the respondent, submitted that Section 11C of the Act was an enabling provision which empowered the Central Government to issue a notification in the Official Gazette for not recovering whole of the excise duty payable on certain goods or recovering the excise duty lesser than the normal duty payable. He emphasized the opening words of Section 11C, i.e. 'power not to recover duty of excise...'. His argument, thus, was that it is a pr....
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....ng that no such duty shall be payable or lesser duty shall be payable on such goods? Thirdly, if the Government chooses not to exercise this 'power', whether the Court can issue a mandamus to the Central Government to pass such a notification exercising its power under Section 11C of the Act? We have bestowed our serious consideration that this case deserves to the issues involved. QUESTION NO. 1 24) It may be remarked in the first instance that, undoubtedly, as far as duty under the Excise Act on the goods manufactured and cleared for sale by the appellant is concerned, the same is payable under the provisions of the Excise Act. It is the appellant's own case that the legal position in this behalf, before the judgment dated 11.07.2011 in the case of Gurukripa Resins Private Limited, was somewhat fluid and uncertain. Those units manufacturing Rosin and Turpentine by using power in all processes are concerned, i.e. vacuum chemical treatment process, were admittedly liable to pay the excise duty and were paying also. However, insofar as the units adopting Bhatti process (to which category the appellant belongs and wherein the whole of the process is manual, except for one process....
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....urvey, this general practice stood established. For this purpose, the appellant is relying upon certain extracts from the Noting dated 20.05.2014 of the Commissioner (Central Excise). The said Noting, when read in entirety, does not categorically admit of any such practice. What it reveals is that in the second survey it was found that 37 unregistered units had crossed SSI exemption limit at least once, but they were not paying duty during the period in question. From this the Director in his note had observed that there was practice of not paying the duty. However, what is significant is that the Commissioner (Central Excise) in his Note dated 20.05.2014 specifically stated that he was not in agreement with the aforesaid conclusion arrived at by the Director, which was highly debatable. He remarked that despite the judgment of this Court in Collector of Central Excise, Jaipur v. Rajasthan State Chemical Works, Deedwana, Rajasthan (1991) 4 SCC 473, relevant question was as to whether there was a practice and non-levy of duty during the relevant period. This is because Section 11C of the Act comes into play only when legally the duty is levied but still there is a practice of non-le....
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....istered units were, in fact, paying the duty, show cause notices were issued to the remaining two units, namely, the appellant and Gurukripa. That itself negates the argument of existence of general practice of not levying the duty of excise. It is stated at the cost of repetition that merely because some unregistered firms which were initially getting the SSI exemption, but omitted to be covered under the Act on their crossing the SSI limits, would not, in our opinion, establish any such practice. 29) In this behalf, it also needs to be highlighted that as far as the Department is concerned, it had taken a categorical stand that even those units which are using Bhatti method for manufacture of Turpentine and Rosin were covered by the Act and that was the reason for issuing of show cause notices to the two units. This view, which the Department had nurtured while issuing the notices, has been vindicated in view of the judgment of this Court in Gurukripa Resins Private Limited. Interestingly, after the said judgment, even the appellant paid the duty of excise. The entire effort now is to recover back the said duty by seeking issuance of a notification under Section 11C of the Act. ....
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....he said judgment is useful and worth a quote: "25. Interference with the policy decision and issue of a mandamus to frame a policy in a particular manner are absolutely different. The Act has conferred power on the Central Government to issue Notification regarding the manner in which the census has to be carried out and the Central Government has issued Notifications, and the competent authority has issued directions. It is not within the domain of the Court to legislate. The courts do interpret the law and in such interpretation certain creative process is involved. The courts have the jurisdiction to declare the law as unconstitutional. That too, where it is called for. The court may also fill up the gaps in certain spheres applying the doctrine of constitutional silence or abeyance. But, the courts are not to plunge into policy making by adding something to the policy by way of issuing a writ of mandamus. There the judicial restraint is called for remembering what we have stated in the beginning. The courts are required to understand the policy decisions framed by the Executive. If a policy decision or a Notification is arbitrary, it may invite the frown of Article 14 of the C....
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....t has the power to strike down a law on the ground of want of authority, but the Court will not sit in appeal over the policy of Parliament in enacting a law"." 33) As can be seen from the extracted portion of the said judgment, in Supreme Court Employees Welfare Association v. Union of India (1989) 4 SCC 187, it was categorically held that no court can direct a legislature to enact a particular law. Similarly when an executive authority exercises a legislative power by way of subordinate legislation pursuant to the delegated authority of a legislature, such executive authority cannot be asked to enact the law which it has been empowered to do under the delegated legislative authority. 34) We may also refer to the judgment of this Court in the case of Common Cause v. Union of India and Others(2003) 8 SCC 250. In that case, though the legislature had made amendments in the Delhi Rent Act, it was left to the Government to notify the date of coming into force the said amendments. Government did not notify any date. A writ was filed seeking issuance of mandamus to the Government to notify the date, which was dismissed by the High Court. While approving the said decision in the afores....
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....e with oblique end or extraneous purposes or upon extraneous considerations, or arbitrarily, without applying its mind to the relevant considerations, or where it is not guided by any norms which are relevant to the object to be achieved. 37) In the counter affidavit filed by the respondent, it is categorically mentioned that the policy of the Government is not to issue the notification under Section 11C of the Act when it benefits only a few assesses. It is mentioned that the specific policy of the Government is that when a large section of trade is affected and any relief is proposed to be given, a notification under Section11C of the Act is issued. When the reasons furnished by the Government in not exercising its power to issue notification under Section 11C of the Act are seen in this perspective, namely, such a notification, if issued, is going to benefit only two units, we find them to be valid and justified. While dealing with the challenge to the constitutional validity of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, in the case of Madria Chemicals Ltd. Etc. Etc. v. Union of India and others Etc. Etc. (2004) 4 S....